Nov. 1 (Bloomberg) -- Royal Dutch Shell Plc’s third-quarter
profit expanded 2.3 percent after Europe’s biggest oil company
generated increased earnings from liquefied natural gas. Its
shares rose the most since April in London trading.

Net income rose to $7.14 billion from $6.98 billion a year
earlier, Shell said today in a statement. Excluding one-time
items and inventory changes, profit was $6.6 billion, beating
the $6.3 billion average estimate of 13 analysts surveyed by
Bloomberg.

Earnings “benefited from the increased contribution from
integrated gas, which included an additional dividend from an
LNG venture,” said Shell, based in The Hague. LNG sales gained
4 percent to 4.97 million metric tons from a year ago, mainly
reflecting the contribution from the Pluto project in Australia.

Shell, which expects for the first time to pump more gas
than crude this year, is expanding LNG projects on rising demand
from Asia. It’s the world’s largest supplier of the fuel and has
interests in about a quarter of the LNG ships in operation.

The company’s shares advanced 2.5 percent to 2,177 pence in
London trading, the biggest gain since April 26.

“Although production volumes were relatively flat, the
company again demonstrated very strong cash flow generation in
spite of headwinds with U.S. gas prices,” said Richard
Griffith, an analyst at Oriel Securities Ltd. in London.

Gas to Liquids

Third-quarter production fell about 1 percent to 2.982
million barrels of oil equivalent a day from a year ago partly
because of works at fields in the North Sea, including the
Shearwater platform, and shutdowns in the Gulf of Mexico because
of Tropical Storm Isaac. Liquids production dropped 5 percent,
while gas pumping was up 4 percent in the period.

The Pearl gas-to-liquids plant in Qatar has been running at
more than 85 percent of capacity in recent days, Chief Financial
Officer Simon Henry said. “We are very much on track to finish
ramping up towards full capacity in the fourth quarter.” Full-scale operation at the $19 billion plant, the biggest in the
world, was delayed from July because of maintenance.

Chief Executive Officer Peter Voser in February forecast 50
percent higher operational cash flow through 2015 on new
projects. The Anglo-Dutch company, which scaled back shale-gas
drilling in the U.S. to focus on oil, agreed in September to pay
$1.9 billion to Chesapeake Energy Corp. for liquids-rich acreage
in Texas.

“We have announced around $6 billion of acquisitions and
new acreage and also around $6 billion of asset sales in 2012,
which will better position Shell for growth,” Voser said in
today’s statement.

U.S. Gas

In North America the company ran 29 rigs drilling liquid-rich shale at the end of September, from six units a year ago,
the CFO said. Shell more than halved dry-gas drilling to 11
rigs, and focused mostly on Pennsylvania’s Marcellus Shale as
well as western Canada. This year, “we’ve invested some $700
million less than originally intended on gas,” Henry said.

Shell expects to pump about 50,000 barrels a day of oil
equivalent from liquid-rich shale including Eagle Ford, Texas,
by the year-end, Henry said in comments posted on the company
website.

“We’ve seen prices touch $2” per million British thermal
units in 2012 “whereas we don’t see any really of the shale gas
plays as being economic at anything below $3 and most of them
need $4 to $5,” Henry said. Shell plans projects on $4 to $6
per million Btu and sees $8 as “an upper limit” as buyers will
switch to fuels such as coal for power generation, he said.

Net Charge

The earnings include a net charge of $298 million, “mainly
related to onshore gas properties in North America.” BP and BG
Group Plc wrote down the value of some U.S. shale assets when
reporting second-quarter results.

“Impairments were more limited than some could have
feared,” said Dominique Patry, an analyst at Credit Agricole
Cheuvreux SA. “Given competitors’ massive writedown in the
second quarter, some were fearing that Shell would have to carry
the same exercise.”

Shell spent about $600 million on new exploration license
acquisitions in the quarter, including in Benin deepwater, the
Gulf of Mexico and onshore North America. New acreage was also
added off Australia, China, Malaysia and Ukraine, it said.

In Iraq, Shell delayed an expansion of output at the
Majnoon oilfield until next year. Its partners, including
Petroliam Nasional Bhd of Malaysia, plan to boost extraction to
175,000 barrels of oil a day, its first commercial rate.

The field is expected to pump about 70,000 barrels a day at
the end of the year, Thamir Ghadhban, a senior adviser to Iraqi
Prime Minister Nouri al-Maliki, said last month.